| The Tax Publishers2021 TaxPub(DT) 6335 (Bang-Trib) INCOME TAX ACT, 1961
Section 36(1)(va) Section 43B
Amendment brought about by Finance Act, 2021 to sections 36(1)(va) and 43B alters position of law adversely to assessee. Therefore, such amendment cannot be held to be retrospective in nature. Even otherwise, amendment has been mentioned to be effective from 1-4-2021 and would apply for and from assessment year 2021-22 onwards. Accordingly, amendment to sections 36(1)(va) and 43B by Finance Act, 2021 was only prospective in nature and not retrospective. Therefore, assessee was entitled to deduction of employees' contribution to PF and ESI, as payment was made prior to due date of filing of return of income under section 139(1).
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Business deduction under section 36(1)(va) - Employees' contributions towards PF and ESI - Payment beyond due dates under relevant Acts but within due date under section 139(1) - Explanation 5 to section 43B inserted by the Finance Act, 2021 with effect from 1-4-2021
Assessee deposited employees' contribution of PF and ESI beyond due dates under relevant Acts but within due date under section 139(1). AO disallowed deduction claimed by assessee under section 36(1)(va) in view of Explanation 5 to section 43B inserted by the Finance Act, 2021 with effect from 1-4-2021. Held: Amendment brought about by the Finance Act, 2021 to sections 36(1)(va) and 43B alters position of law adversely to assessee. Therefore, such amendment cannot be held to be retrospective in nature. Even otherwise, the amendment has been mentioned to be effective from 1-4-2021 and would apply for and from assessment year 2021-22 onwards. Accordingly, amendment to sections 36(1)(va) and 43B by Finance Act, 2021 was only prospective in nature and not retrospective. Therefore, assessee was entitled to deduction of employees' contribution to PF and ESI, as payment was made prior to due date of filing of return of income under section 139(1).
Relied:Shakuntala Agarbathi Company v. DICT ITA No. 385/Bang/2021 [Order, dated 21-10-2021]. Distinguished:CIT-I, Ahmedabad v. Gold Coin Health Food (P) Ltd. (2008) 304 ITR 308 (SC) : 2008 TaxPub(DT) 2223 (SC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2019-20
IN THE ITAT, BANGALORE BENCH
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